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U.S. dollar closes lower on Taipei forex (update)

U.S. dollar closes lower on Taipei forex (update)

Taipei, March 1 (CNA) The U.S. dollar fell against the Taiwan dollar Tuesday, shedding NT$0.056 to close at the day's high of NT$33.436 after a move by the People's Bank of China (PBOC) to cut the reserve requirement ratio for banks by 0.5 percentage points, which reinforced market faith in the regional economy, dealers said.

Selling in the U.S. dollar also came after foreign investors continued to move funds into the region and further foreign institutional buying in the local equity market before the local central bank stepped in to slow the pace of the Taiwan dollar's appreciation, the dealers said.

The greenback opened at NT$33.285 and moved to a low of NT$33.098 before rebounding to the day's high at the close. Turnover totaled US$740 million during the trading session.

The U.S. dollar opened lower against the Taiwan dollar, extending losses from a session earlier, as traders took cues from the strength of other regional currencies after the PBOC's cut in the banks' reserve requirement ratio, the dealers said.

The reduction prompted traders in the region to believe that China is determined to bolster its economy, the second-largest in the world, and such hopes encouraged traders to buy into the currencies in the region, including the Taiwan dollar, they said.

The U.S. dollar faced additional downward pressure in the local foreign exchange market as foreign investors kept moving funds into the region, the dealers said, adding that the fund inflows led foreign institutional investors to raise their holdings in the local equity market.

According to the Taiwan Stock Exchange, foreign institutional investors bought a net NT$3.37 billion (US$101 million)-worth of shares on the local main board, sending the weighted index up 0.89 percent at the close Tuesday. After witnessing the U.S. dollar falling below the NT$33.10 level, Taiwan's central bank resumed its buying in the greenback, and its intervention became more visible in the latter part of the trading session, helping the U.S. currency to recoup most of its earlier losses, the dealers said. (By Chiu Po-sheng and Frances Huang)